Profusa, Inc.

Current report

Item 1A. Risk Factors.

Current report

Risks Related to Our Proposed Acquisitions and Strategic Transactions

Current report

Our proposed acquisition of G3 Vision Labs Inc. and its subsidiaries is subject to numerous conditions and may not be completed on the terms currently contemplated, or at all.

Current report

On July 31, 2026, we entered into an option agreement with certain stockholders of G3 Vision Labs Inc. (“G3”) pursuant to which we obtained the right, but not the obligation, to acquire 100% of the outstanding equity securities of G3. G3 owns all or substantially all of the equity securities of Med Screen Laboratories Inc., Dominion Diagnostics LLC and Acutis Diagnostics Inc. Our ability to exercise the option and complete the contemplated acquisition is subject to numerous conditions, including: (i) consummating, or obtaining binding commitments for, one or more financings resulting in aggregate gross proceeds of at least $30.0 million; (ii) the refinancing, repayment or other satisfaction of certain G3 indebtedness or receipt of applicable lender consents; (iii) receipt of certain stockholder and Nasdaq approvals; (iv) continued listing of our common stock on Nasdaq; (v) release of the sellers from certain obligations relating to indebtedness of the target companies; and (vi) execution of definitive acquisition documents. The option expires 90 days after the target companies provide us with specified audited and reviewed financial information. There can be no assurance that we will satisfy these conditions within the required timeframes, if at all. Even if we satisfy the conditions to exercise the option, the contemplated acquisition may not be completed due to factors outside our control, including our failure to obtain necessary financing on acceptable terms or third-party consents. If the acquisition is not completed, we will not realize the anticipated benefits, will have incurred significant transaction costs, and will have issued 201,120 shares of common stock and 52,903.566 shares of Series A Non-Voting Convertible Preferred Stock to the sellers without acquiring the target companies. In addition, the announcement of the proposed transaction may cause disruption to our business and divert management attention from our ongoing operations.

Current report

We may be unable to successfully integrate G3 and its subsidiaries or realize the anticipated benefits of the acquisition.

Current report

If we complete the acquisition of G3, we will face significant challenges integrating G3’s operations, technologies, and personnel with our existing business. The success of the acquisition will depend, in part, on our ability to realize the anticipated benefits and synergies from combining the businesses. We may be unable to successfully integrate G3’s operations, technologies, and personnel in a timely manner, or at all. The integration process may disrupt our ongoing business and divert management resources, and we may encounter unexpected costs, liabilities, or delays. G3 and its subsidiaries operate in the health diagnostics and toxicology testing market, which is different from our current biosensing focus, and we have limited experience operating in this market. We may face difficulties retaining key employees, customers, or suppliers of G3. If we fail to successfully integrate G3, or if the integration takes longer or costs more than anticipated, our business, financial condition, and results of operations could be materially adversely affected, and we may not achieve the anticipated benefits of the acquisition. Any future acquisitions could present a number of risks, including: the risk of using management time and resources to pursue acquisitions that are not successfully completed; the risk of incorrect assumptions regarding the future results of acquired operations; the risk of failing to integrate the operations or management of any acquired operations or assets successfully and timely; and the risk of diversion of management’s attention from existing operations or other priorities.

Current report

Holders of our Series A Non-Voting Convertible Preferred Stock may experience significant dilution upon conversion, and we may be required to redeem such shares for cash if stockholder approval for conversion is not obtained.

Current report

In connection with the Option Agreement, we issued an aggregate of 52,903.566 shares of Series A Non-Voting Convertible Preferred Stock to the sellers and 3,037.381 shares of Series A Non-Voting Convertible Preferred Stock to our financial advisor. Each share of Series A Preferred Stock is convertible into 1,000 shares of common stock following receipt of required stockholder approval, subject to certain beneficial ownership limitations. If stockholder approval is obtained and all outstanding Series A Preferred Stock is converted, approximately 55.9 million shares of common stock would be issuable, which would result in substantial dilution to our existing stockholders. Furthermore, if we exercise the option to acquire G3, the sellers will be entitled to receive an additional 53,918.113 shares of Series A Preferred Stock, which would be convertible into an additional approximately 53.9 million shares of common stock upon stockholder approval. Prior to receipt of any applicable stockholder approval, the Series A Preferred Stock shall not be convertible into more than 19.99% of the number of shares of common stock outstanding immediately prior to the closing date, in accordance with Nasdaq Listing Rules. In addition, if the acquisition closes and, 18 months following closing, the required stockholder approval for conversion has not been obtained and we are unable or otherwise fail to deliver the common shares issuable upon conversion, each seller may elect to require us to redeem its Series A Preferred Stock for cash at an amount based on the then-current fair value of the underlying common stock. We may not have sufficient funds available to satisfy any such redemption obligation, and such redemption could have a material adverse effect on our liquidity and financial condition.

Current report

Risks Related to Our Management and Personnel

Current report

We recently experienced significant changes in our executive leadership, and the transition may disrupt our business.

Current report

In connection with the proposed acquisition contemplated by the non-binding term sheet, effective July 21, 2026, Jack Stover was appointed Executive Chairman and Chief Executive Officer and Ben Hwang was appointed President. On July 26, 2026, Mr. Hwang resigned from the Board of Directors while continuing to serve as President, and Liviu Goldenberg was appointed as an independent director. From time to time, our executive management team may change from the hiring or departure of executives, which could disrupt our business. These leadership changes may result in disruption to our business and operations as our new executives become familiar with our operations, strategy, and personnel. Our success depends largely upon the continued services of our executive officers and on certain other mission-critical individual contributors. We rely on our leadership team for the management and oversight of our business operations, including developing and executing our strategy, business and financial planning, research and development, and other functions. The loss of one or more of our executive officers or key employees could have a serious adverse effect on our business. Competition for qualified personnel in our industry is intense, and we may be unable to retain our current key employees or attract and retain additional qualified personnel. The loss of, or failure to attract, key personnel could delay or prevent the achievement of our business objectives and could materially and adversely affect our business, financial condition, and results of operations.

Current report

Risks Related to Warrants Issued in Connection with Debt Financing

Current report

Dilution from warrant exercise

Current report

The warrants we issued in connection with the Ascent Convertible Note Agreement under Tranche 3 on April 20, 2026 may result in dilution to our existing stockholders and could adversely affect the market price of our common stock.

Current report

In connection with the additional closing on April 2, 2026, the Company issued an Ascent PIPE Note with an aggregate principal amount of approximately $0.6 million. The note matures on April 2, 2027, bears interest at 12% per annum and is convertible into shares of the Company’s common stock, subject to the terms of the note. As consideration for Ascent’s participation in the April 2, 2026 additional closing, Ascent earned a warrant (“Ascent Warrant”) to purchase 11,111 shares of the Company’s common stock at an exercise price of $50.00 per share, as adjusted for the July and August Reverse Stock Splits. The Ascent Warrant was exercisable on a cash or cashless basis for a period of five years and was subject to a 9.99% beneficial ownership limitation and customary anti-dilution adjustments.

Current report

In connection with the additional closing on April 20, 2026, the Company issued an Ascent PIPE Note with an aggregate principal amount of approximately $1.1 million. The note matures on April 20, 2027, bears interest at 12% per annum and is convertible into shares of the Company’s common stock, subject to the terms of the note. In connection with the April 20, 2026 closing, the Company entered into a side letter agreement with Ascent pursuant to which Ascent waived certain defaults under the Purchase Agreement and the Company issued a replacement Ascent Warrant that replaced the warrant earned on April 2, 2026. The replacement warrant increased the number of shares issuable upon exercise from 11,111 shares to 33,333 shares, as adjusted for the July and August Reverse Stock Splits, retained an exercise price of $50.00 per share and is exercisable on a cash or cashless basis through April 20, 2031. The Ascent Warrant was fair valued at $2.2 million at April 20, 2026 and was expensed under financing costs on the condensed consolidated statements of operations. See Note 8 - Common Stock Warrants for inputs to estimate the fair value of the warrant at issuance. The Company also agreed to provide Ascent with demand and piggyback registration rights with respect to the underlying shares.

Current report

In connection with the issuance of the replacement warrant, Ascent entered into a lock-up agreement with the Company, dated April 20, 2026, pursuant to which Ascent agreed not to transfer the shares underlying the replacement warrant for 120 days, expiring August 22, 2026, subject to customary exceptions. Any permitted transferee is required to execute a lock-up agreement on substantially similar terms.

Current report

As of June 30, 2026, the Warrants, if fully exercised into 33,333 common shares, would represent approximately 5.5% of our outstanding common stock on a post-exercise, fully diluted basis.

Current report

If the market price of our common stock exceeds the exercise price of the Warrants at the time of exercise, the exercise of the Warrants will have a dilutive effect on our existing stockholders’ ownership interests. The holder of the Warrants may exercise them at a time when we could otherwise obtain additional capital on terms more favorable to us than the terms available to the Warrant holder. The issuance of shares of common stock upon exercise of the Warrants, or the perception that such exercise may occur, could adversely affect the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

Current report

Anti-dilution / down-round protection

Current report

The Warrants contain anti-dilution provisions that could result in further dilution to our stockholders and could limit our ability to raise capital on favorable terms.

Current report

The Warrants include anti-dilution provisions pursuant to which, subject to certain exceptions, if we issue or sell shares of common stock (or securities convertible into or exercisable for common stock) at an effective price per share below the then-current exercise price of the Warrants, the exercise price of the Warrants will be reduced to that lower price, and/or the number of shares issuable upon exercise will be increased.

Current report

While no such adjustment has been triggered to date, if we raise additional capital in the future at a price below the current Warrant exercise price, these provisions would be triggered, resulting in additional dilution to our existing stockholders beyond that resulting from the exercise of the Warrants alone. The existence of these anti-dilution provisions may also make it more difficult and costly for us to raise additional capital, as potential investors may view the prospect of triggering these adjustments unfavorably, and may require us to negotiate less favorable terms with future investors to account for this risk.

Current report

If exercised for cash, the Warrants would provide us with additional liquidity; however, we cannot predict when or whether the Warrant holder will exercise the Warrants, and the likelihood of exercise depends largely on the market price of our common stock relative to the exercise price. We are not relying on proceeds from Warrant exercises to fund our operations, and there can be no assurance that any such proceeds will be available to us.

Current report

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Current report

On July 31, 2026, in connection with entering into the Option Agreement with certain stockholders of G3 Vision Labs Inc. described in Note 13 to the condensed consolidated financial statements, the Company issued to the sellers an aggregate of 201,120 shares of common stock and 52,903.566 shares of Series A Non-Voting Convertible Preferred Stock. The securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder, based on representations made by the sellers regarding their status as accredited investors and the private nature of the transaction. In connection with entering into the Option Agreement, the Company was also obligated to issue 3,037.381 shares of Series A Non-Voting Convertible Preferred Stock to its financial advisor. The securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

Current report

Item 3. Defaults Upon Senior Securities.

Current report

Item 4. Mine Safety Disclosures

Previous report

None.